Gold prices have seen slight upward momentum despite the release of upbeat industrial production figures for the month of February. US industrial production rose 0.6% last month vs. 0.4% expected and following a drop of -0.5% the month before. The Federal Reserve’s figures show that manufacturing output is down 0.4% from last year.
- Industrial production rose 0.6% vs. 0.4% expected and -0.5% in January.
- Manufacturing output rose 0.1% last month, down 0.4% on an annual basis.
- The survey period for this data ended just before the major coronavirus disruption.
February industrial production figures were relatively upbeat, outperforming initial expectations. Capacity utilization improved from 76.6% to 77%, and manufacturing output rose 0.1%. This was led by increased demand for motor vehicles and parts which saw 3.5% growth in output. The number of hours worked by factory workers saw an increase. Mining output fell 1.5% last month, indicating softness in the energy sector, and utility output rose 7.1%.
However, while the figures are business as usual for February, they do not reflect the dire circumstances that now surround the manufacturing industry. After struggling for over a year due to the trade war with China, the industry had seen signs of renewed vigor, but the coronavirus outbreak and its impact on global supply chains is beginning to make itself known.
Ian Sheperdson, chief economist at Pantheon Macroeconomics, stated that early March data indicates that the manufacturing industry “has plunged headline into deep recession.” The New York Fed’s Empire State survey sell a record 34.4 points to -21.5, a level not seen since the 2008 financial crisis.
In what may be an early-warning signal to other economies, the Chinese economy has suffered a major collapse according to February figures. While economists had expected a decline of 3% year-on-year for January and February, Chinese industrial production actually plummeted 13.5%.
China industrial production - off the lows. Ugh. pic.twitter.com/FdL962gsPd
— Contrahour (@Contrahour) March 16, 2020
This marks an unprecedented contraction in the world’s second largest economy, and as China is the the nation first affected by the coronavirus outbreak, economists are concerned about the extent the outbreak will affect other economies in kind.
Gold prices have ticked upward following the joint release of US industrial production and retail sales figures. While industrial production was upbeat, retail sales fell 0.5% in the US. Sales also dropped a massive 20.5% in China.
Spot gold last traded at $1,501.42/oz, up 1.04% with a high of $1,517.34/oz and a low of $1,467.33/oz. Gold prices are trading in a wide range today with sudden, volatile price movements as markets continue to react to the unfolding coronavirus outbreak which has rocked the stock markets along with cryptocurrency, gold, and equities.